Coca Cola 2010 Annual Report Download - page 112

The Company determines the fair values of its derivatives based on quoted market prices or pricing models using
current market rates. Refer to Note 16. The notional amounts of the derivative financial instruments do not necessarily
represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial
risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms
of the derivatives, such as interest rates, foreign currency exchange rates or other financial indices. The Company does
not view the fair values of its derivatives in isolation, but rather in relation to the fair values or cash flows of the
underlying hedged transactions or other exposures. Virtually all of our derivatives are straightforward over-the-counter
instruments with liquid markets.
The following table presents the fair values of the Company’s derivative instruments that were designated and qualified
as part of a hedging relationship (in millions):
Fair Value1,2
Derivatives Designated as December 31, December 31,
Hedging Instruments Balance Sheet Location12010 2009
Assets
Foreign currency contracts Prepaid expenses and other assets $32 $66
Commodity contracts Prepaid expenses and other assets 44
Total assets $36 $70
Liabilities
Foreign currency contracts Accounts payable and accrued expenses $ 141 $22
Commodity contracts Accounts payable and accrued expenses 23
Interest rate swaps Other liabilities 97 —
Total liabilities $ 240 $25
1All of the Company’s derivative instruments are carried at fair value in the consolidated balance sheets after considering the impact
of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable.
However, current disclosure requirements mandate that derivatives must be disclosed without reflecting the impact of master
netting agreements and cash collateral. Refer to Note 16 for the net presentation of the Company’s derivative instruments.
2Refer to Note 16 for additional information related to the estimated fair value.
The following table presents the fair values of the Company’s derivative instruments that were not designated as
hedging instruments (in millions):
Fair Value1,2
Derivatives Not Designated as December 31, December 31,
Hedging Instruments Balance Sheet Location12010 2009
Assets
Foreign currency contracts Prepaid expenses and other assets $65 $ 110
Commodity contracts Prepaid expenses and other assets 56 7
Other derivative instruments Prepaid expenses and other assets 17 9
Total assets $ 138 $ 126
Liabilities
Foreign currency contracts Accounts payable and accrued expenses $ 144 $88
Total liabilities $ 144 $88
1All of the Company’s derivative instruments are carried at fair value in the consolidated balance sheets after considering the impact
of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable.
However, current disclosure requirements mandate that derivatives must be disclosed without reflecting the impact of master
netting agreements and cash collateral. Refer to Note 16 for the net presentation of the Company’s derivative instruments.
2Refer to Note 16 for additional information related to the estimated fair value.
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